Hello all,
I'm a new member from CFL area. joined to ask specific question about my situation to get some input from some people who are smart about these sort of things.
So I currently live in a home that my wife bought before we were married. it was bought at the peak and is probably under water a considerable amount. This hasn't really had any negative effect except psychologically it can be bothersome. The other thing about it is I don't really like this house that much. We've talked about upgrading or lateral moving to something we can both decide on together and I think we would have done that a while ago if it wasn't for the underwater-ness and figuring out how to deal with that. We refinanced a year ago and shortened the term to 15years at a much better rate.
Now some twists to the age ol' story of the underwater house...
We have enough cash to easily pay this house off. We've never really entertained this as a realistic option because 1) I don't really like living here that much and 2) I'd feel like I'd essentially be throwing $ away into the underwater gap...
This cash could also easily buy us another home we'd be comfortable living in. We're also very interested in the idea of buying a distressed home with potential and fixing it up together and customizing it as we like. We're really interested in this idea because we like home improvements/reno projects and think this would be a lot of fun for us to customize "our" home together.
so that's all fine, however it leaves the issue of what to do with the underwater house.
The idea we've tossed around the most is buying our new house cash, taking whatever time we need to fix up as needed before moving in, then moving in and renting out our current house to get some rental income. Our current neighborhood is a cute one with a little community pool and on a community pond. I think its a good rental neighborhood. There are a few rentals on our street that have been nice long term rentals, the neighborhood is in a convenient location...I think we wouldn't have a problem renting it.
The comp rentals on our street would not cover the mortgage. I don't really see this as being an issue because our new place would be paid in full and we'd be generating an additional income stream and covering the difference would be no issue. We're barely in our 30's, but we envision trying to own some rental properties over time. We think this may be a nice way to get our first landlord experience, upgrade our living situation, generate some additional income to pitch into the underwater-gap so the house can pay back IT's debt (time for you to get a job house, lol) to us and over time own it outright as our first rental property.
Now aside from the standard warnings of landlording (if we decide to go this route, those questions will be coming lol), I would appreciate any input on this line of thinking. I've searched around a lot for ideas or info on a plan like this, however most scenarios i find are people are wanting to get out of an underwater house with a mortgage and get another mortgage and rent the first property and walk a tight rope that depends on rental occupancy and income covering the first mortgage.
Is this a reasonable line of thinking for our situation? it seems a little weird because we're breaking out of the "have a house with a mortgage and that's the one you live in and pay for" paradigm that has always been "standard"
The other idea was to figure out some sort of strategic foreclosure path. I own a small business and my wife and I have a decent amount of assets and florida is a recourse state and that path seems more messy and risky to other things we have going on so we never really pursued it very seriously.
Thanks in advance for reading and any input!
